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Analysis of ANO Advance Nanotek Ltd Annual Report as per Conceptual Framework of Accounting

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Added on  2023-05-28

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This report analyzes ANO Advance Nanotek Ltd's annual report as per the conceptual framework of accounting. It discusses compliance with measurement requirements and qualitative characteristics, and whether the financial reports assist decision-making. The report also covers the general objectives of financial reporting and the accounting knowledge required by users for company analysis.

Analysis of ANO Advance Nanotek Ltd Annual Report as per Conceptual Framework of Accounting

   Added on 2023-05-28

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CONTEMPORARY ISSUES IN ACCOUNTING
1
Analysis of ANO Advance Nanotek Ltd Annual Report as per Conceptual Framework of Accounting_1
Introduction
The present report is developed for carrying out an analysis of the annual report of ANO
Advance Nanotek Ltd as per the conceptual framework of accounting. The company is
recognized as a specialist developer and manufacturer of advanced materials and is listed on the
ASX. The company needs to comply with characteristics of accounting conceptual framework
(CF) as stated by the IASB. IASB has developed the conceptual accounting framework that
needs to be followed by ASX listed entities for developing and disclosing quality financial
information to the end users. In this context, this report has presented a discussion in relation to
whether the company has complied with the measurement requirements and fundamental and
enhancing qualitative characteristics of CF. It also discusses whether the financial reports
developed by the company are able to assist the decision-making process of investors and have
met the general purpose of financial reporting or not.
Part 1: Compliance of Company with the Measurement Requirements of the Conceptual
Framework (CF)
The CF of accounting has stated that selection of a measurement basis by an entity
depends on the benefit of the information provided to users by the selection of that measurement
approach. The measurement basis selected by an entity can be either historical or current value
depends on the nature of an asset or liability. The selection of more than one measurement basis
is required for an asset or liability to faithfully present the entity’s financial position to the end-
users. ANO Advance Nanotek Ltd has adopted the use of fair value of measurement basis for
reporting the value of all its financial instruments. The financial assets after initially being
recognized are subsequently measured at their current value (IFRS Conceptual Framework
Project Summary, 2018). Financial liabilities are classified at fair value through profit or loss
depending on the purpose for which the liability was acquired. Revenue is also measured at the
fair value of the consideration received or to be received. The company has adopted AASB 9
accounting standard for identifying and measuring the financial assets at fair value. The
accounting standards AASB 15 Revenue from Contracts with Customers has been adopted for
providing guidance on the recognition of revenue from customers (Annual Report, 2018).
Part 2: Compliance with Fundamental Qualitative Characteristics
The two major fundamental qualitative characteristics of CF are relevance and faithful
presentation of information. The value of financial items disclosed should have both predictive
and confirmatory value. The predictive value means that the information disclosed must be able
to support the future decisions of end-users while confirmatory value states that it should be able
to confirm the past valuations. The annual report of the company has disclosed both predictive
and confirmatory value of its key financial items. For example, revenue and other income value
are able to predict both future and provided an evaluation of the past financial information
2
Analysis of ANO Advance Nanotek Ltd Annual Report as per Conceptual Framework of Accounting_2
(Annual Report, 2018). As such, it can be stated that the company provides relevant financial
information which can be confirmed by the image depicted below:
(Source: https://www.asx.com.au/asxpdf/20180803/pdf/43x23v8nwlgx67.pdf)
Faithful presentation is another major fundamental characteristic of that need to be
followed by businesses at the time of financial report preparation. This means that the
information disclosed must be materially correct to support accurate decision-making process of
end-users. The financial information must be materially correct and error-free (Macve, 2015).
The financial report of the company has disclosed auditor’s independence declaration for
ensuring that the financially information disclosed is accurate in all aspects to support the final
decisions of end-users. The same can be verified by the below image:
(Source: https://www.asx.com.au/asxpdf/20180803/pdf/43x23v8nwlgx67.pdf)
Part 3: Enhancing Qualitative Characteristics of Financial Information
3
Analysis of ANO Advance Nanotek Ltd Annual Report as per Conceptual Framework of Accounting_3

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